Ed Miliband speaks at the Scottish Labour conference last month. Photograph: Getty Images.
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Miliband makes his big offer on the minimum wage

The minimum wage will rise faster than median earnings over the next parliament. 

There are two components of the living standards crisis that Ed Miliband has made it his defining mission to tackle. The first is excessive prices, the second is inadequate wages. Miliband has recently had much to say about the former, pledging to freeze energy bills, extend free childcare and cap rent increases. But he has had less to say about the latter. When George Osborne announced in January that he hoped to increase the national minimum wage to £7 by 2015-16, many in Labour complained that the party hadn't pre-empted his offer. To date, Miliband has limited himself to an often vague-sounding pledge to "strengthen" the legal minimum. Labour MPs and activists, who want to see it substantially hiked, not merely better enforced, are critical of such moderation. 

But tomorrow he will go a long way to assuaging their concerns. At the launch of former KPMG deputy chairman Alan Buckle's report on low pay for the party, he will endorse its central recommendation to increase the minimum wage faster than median earnings over the course of the next parliament, so that the gap between the two is significantly narrowed (the former currently represents 53 per cent of the latter). 

A Labour source told me: "We see this as taking the minimum wage from tackling the real bottom-end of the labour market, the worst cases of exploitation, which is what it was originally designed to do, to a whole new ballgame. We're now saying we're going to tackle low pay by having a minimum wage which is explicitly linked to median wages, so when the economy does well and median wages rise, so will the minimum wage. And in order to get that process started, we're going to dramatically increase the proportion that the minimum wage represents." From an instrument to tackle poverty pay, the minimum wage will be transformed into one to tackle long-term inequality. 

In recent years, the minimum wage has fallen back to its 2004 level, leaving 5.2 million people (one in five of all workers) stranded on low pay, up from 4.8 million in 2012 and 3.4 million in 2009. The cost to the state, in the form of lost tax revenue and higher benefit payments, is estimated at £3.23bn a year.

Were the policy to be implemented, it would represent the most significant change to the minimum wage since its introduction in 1999. At present, the independent Low Pay Commission (LPC) recommends an annual rate every 12 months. But under Labour's plan, its mandate would be reformed to give it a legal duty to consider pay over a longer time frame, comparable to the Bank of England's 2 per cent inflation target. Alongside this, it would be empowered to create taskforces with employers and employees to boost productivity and wages in low-paid sectors, and ensure that those sectors which can afford to pay more do so. Crucially, however, the LPC would retain the capacity to "take account of shocks to the economy". 

Many in Labour will continue to regard the new policy as inadequate. They, in common with most of the public, would like to see the minimum wage (currently £6.31 an hour) raised to the level of the living wage (£7.65 nationwide and £8.80 in London). But while Labour is unlikely to pledge to do so (owing to the 160,000 jobs that NIESR estimates the move would cost), Miliband will say in his speech tomorrow that he will set out his "precise ambition" closer to the general election. 

Alongside this, Labour sources emphasise that the party will promote the living wage by making it a condition of major government contracts and by offering temporary tax incentives to firms to raise pay (under the Make Work Pay contracts previously announced). 

Miliband will say tomorrow: 

Britain is still one of the lowest paid countries among the world’s advanced economies. So we have to go further, we have to write the next chapter in the history of Labour’s battle to make work pay. It is time to raise our sights again because Britain can do better than this.

The next Labour government will restore the link between hard work and building a decent life for your family. And today, Alan Buckle’s Report begins to tell us how: it means promoting a Living Wage which is what our fantastic Labour councils are already doing. But most of all it means setting new ambitions for our country.

That’s why today, I am proud to announce that the next Labour government will take new radical action against low pay: a new five-year ambition to restore the link between doing a hard day’s work and building a decent life for your family. A Labour government will establish a clear link between the level of the minimum wage and the scale of wages paid to other workers in our economy. We will say workers on the minimum wage must never be left behind because those who work hard to create our nation’s wealth should share in it. 

This mission to tackle low pay will be in England, Wales, Northern Ireland - and Scotland too - because social justice is best achieved by working together rather than competing against each other in a race to the bottom on wages, tax rates and aspirations for our country. And by helping to make work pay for millions we will chart a new course for Labour too, changing our economy to make work pay and tackle the cost of failure in our social security system too.

Just as when the last Labour government created the National Minimum Wage, the next Labour government will do this in partnership with business once again, allowing employers the certainty they need to plan ahead.

I will set out the precise ambition Labour will propose closer to the election. But today I want to welcome this central recommendation of Alan Buckle’s report and state plainly that, under the next Labour government, hardworking Britain will be better off.

How the Tories will respond is uncertain. In recent months, they have taken an "adopt or kill" approach to Labour's policies: trashing proposals such as a cap on rent increases and living wage deals, while embracing others such as a limit on payday loan charges. But having made such play of their commitment to increase the minimum wage in real-terms and of their regret at their decision to oppose its introduction, they will surely seek to echo Miliband's ambitions. 

George Eaton is political editor of the New Statesman.

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What Brussels can learn from the Italian referendum

Matteo Renzi's proposed reforms would have made it easier for eurosceptic forces within Italy to gain power in upcoming elections in 2018.

The Austrian presidential elections can justifiably be claimed as a victory for supporters of the European Union. But the Italian referendum is not the triumph for euroscepticism some have claimed.

In Austria, the victorious candidate Alexander van der Bellen ruthlessly put the EU centre stage in his campaign. “From the beginning I fought and argued for a pro-European Austria,” he said after a campaign that saw posters warning against “Öxit”.

Austrians have traditionally been eurosceptic, only joining the bloc in 1995, but Brexit changed all that.  Austrian voters saw the instability in the UK and support for EU membership soared. An overwhelming majority now back continued membership.

Van der Bellen’s opponent Norbert Hofer was at an immediate disadvantage. His far right Freedom Party has long pushed for an Öxit referendum.

The Freedom Party has claimed to have undergone a Damascene conversion but voters were not fooled.  They even blamed Nigel Farage for harming their chances with an interview he gave to Fox News claiming that the party would push to leave the EU.

The European Commission, as one would expect, hailed the result. “Europe was central in the campaign that led to the election of a new president and the final result speaks for itself,” chief spokesman Margaritis Schinas said today in Brussels.

“We think the referendum in Italy was about a change to the Italian constitution and not about Europe,” Schinas added.

Brussels has a history of sticking its head in the sand when it gets political results it doesn’t like.

When asked what lessons the Commission could learn from Brexit, Schinas had said the lessons to be learnt were for the government that called the referendum.

But in this case, the commission is right. The EU was a peripheral issue compared to domestic politics in the Italian referendum.

Alberto Alemanno is Jean Monnet Professor of EU Law and an Italian. He said the reforms would have been vital to modernise Italy but rejected any idea it would lead to an Italian Brexit.

“While anti-establishment and eurosceptic actors are likely to emerge emboldened from the vote, interpreting the outcome of the Italian referendum as the next stage of Europe’s populist, anti-establishment movement – as many mainstream journalists have done – is not only factually wrong, but also far-fetched.”

Renzi was very popular in Brussels after coming to power in a palace coup in February 2014. He was a pro-EU reformer, who seemed keen to engage in European politics.

After the Brexit vote, he was photographed with Merkel and Hollande on the Italian island of Ventotene, where a landmark manifesto by the EU’s founding fathers was written.

This staged communion with the past was swiftly forgotten as Renzi indulged in increasingly virulent Brussels-bashing over EU budget flexibility in a bid to shore up his plummeting popularity. 

Commission President Jean-Claude Juncker even publicly reprimanded Renzi for demonising the EU.

Renzi’s vow to resign personalised the referendum. He gave voters a chance to give him a bloody nose when his popularity was at an all-time low.

Some of the reforms he wanted were marked “to be confirmed”.  The referendum question was astonishingly verbose and complex. He was asking for a blank cheque from the voters.

Ironically Renzi’s reforms to the constitution and senate would have made it easier for the eurosceptic Five Star Movement to gain power in upcoming elections in 2018.

For reasons best known to themselves, they campaigned against the changes to their own disadvantage.

Thanks to the reforms, a Five Star government would have found it far easier to push through a “Quitaly” referendum, which now seems very distant.  

As things stand, Five Star has said it would push for an advisory vote on membership of the euro but not necessarily the EU.

The Italian constitution bans the overruling of international treaties by popular vote, so Five Star would need to amend the constitution. That would require a two thirds majority in both houses of parliament and then another referendum on euro membership. Even that could be blocked by one of the country’s supreme courts.

The Italian referendum was closely watched in Brussels. It was hailed as another triumph for euroscepticism by the likes of Farage and Marine Le Pen. But Italians are far more likely to be concerned about the possibility of financial turbulence, which has so far been mildly volatile, than any prospect of leaving the EU in the near future.

James Crisp is the news editor at EurActiv.com.